Energy autonomy and competitiveness in Italy and Europe: the study

A strategic vision based on integrated, coordinated “green” supply chains throughout Europe is necessary to develop a solid and competitive industrial and technological foundation on the continent, with the aim of ensuring autonomy for Europe and Italy. It is also necessary to speed up the process of energy transition in order to bring benefits to the entire economic and political system. These are the concepts to emerge from the study “Energy Transition Strategic Supply Chains. Industrial Roadmap for Europe and Italy”, carried out in collaboration with The European House – Ambrosetti along with the scientific contribution of the Enel Foundation. The study was presented on September 2 at the annual Forum of Cernobbio during a press conference, with the participation of Nicola Lanzetta, our Head of Italy, Valerio De Molli, Managing Partner & CEO of The European House – Ambrosetti, and Maria Chiara Carrozza, President of Italy’s National Research Council (Consiglio Nazionale delle Ricerche, CNR).

The study focuses on three key industry sectors and the role they will play between now and 2030: photovoltaics, batteries and storage systems, and heat pumps. The development of these supply chains in Italy and Europe will help reach the decarbonization goals set by Brussels, guaranteeing greater levels of energy security and strategic autonomy for the EU, with significant socio-economic benefits for businesses and citizens as well.

This is why it is necessary to join together and come up with an action plan - the study identifies various policy proposals - with the adoption of various technological, financial, and regulatory initiatives to make Europe and Italy more competitive, resilient, and independent, reducing the need for foreign imports and closing the gap with international competitors – China, first and foremost. This is the only way it will it be possible to meet the challenge of finding the right balance among reliability, affordability, and sustainability, the so-called “energy trilemma”.

Growth, competitiveness, and autonomy

The study offers a roadmap for the industrial supply chain that is fundamental for achieving decarbonization, along with a qualitative and quantitative analysis of availability and competitiveness factors when it comes to the European and Italian production system. This study highlights one constant: the need for a technologically advanced and competitive manufacturing base that can provide for the production of critical components and devices for energy transition so as to not be dependent on foreign imports.

“The decarbonization process is a unique opportunity to support important industrial sectors of our economy and reduce our dependence on foreign countries. A realistic goal provided that the entire value chain is innovated, in a sustainable sense.”

– Nicola Lanzetta, Head of Italy

Actually, Europe overall is responsible for only 14% of the global production of the 17 strategic components for the major clean technologies: this number absolutely must be increased to close the gap with China, which clearly dominates on its own, with an average of 65% of the world share.

Another element that emerges has to do with the production of solar panels and batteries, which in Italy and the EU involves significantly higher costs than in China due to a variety of factors, including higher initial investment figures, longer factory construction times (up to 1.7 times), and higher energy costs (+ 45%). In addition, there is a lack of specialization in the early stages of the manufacturing chain, including the extraction and refining of raw materials.

Opportunities for Europe

Europe has significant growth levers able to transform these obstacles into wide-ranging opportunities and advantages. Through the effective and intelligent use of funding, the promotion of environmentally and socially sustainable production processes, an increase in recycling, and by coming up with solutions to become a dominant player on the technological front, the European Union and member states could aim to cover, by 2030, more than 50% of the demand for photovoltaic panels, around 90% of the demand for batteries, and more than 60% of the demand for heat pumps. This would allow the EU to meet the targets set by the Net Zero Industry Act (NZIA).

“A key role is attributed to industrial sectors that encourage the spread of renewable energy, such as photovoltaics, heat pumps and storage systems. The study shows that accelerating the implementation of these technologies and doing so through the development of European supply chains, reduces dependence on foreign suppliers and provides environmental, social and economic benefits for people and businesses.”

– Nicola Lanzetta, Head of Italy

According to the report, to effectively implement the sustainable development of the European “green” industry, there needs to be a structural effort backed up by investments and financial instruments, along with better coordination of research activities, which today are too fragmented throughout the continent. The principles of the circular economy also need to be fully integrated throughout the industrial production chain, which needs to be able to make the most of recycling and the use of green technologies. This would offer a competitive advantage in socio-economic and environmental terms that would give European industry a leading role on the global market.

These ambitious aims open up new opportunities for economic growth and geopolitical security. According to the report, the success of decarbonization and the strengthening of industrial supply chains could lead to an economic return of up to approximately 640 billion euros by 2030, while at the same time creating new jobs and long-term value, and reducing energy and technological dependency on outside countries. This would also have a large impact on the costs for end consumers, a crucial issue considering the great geopolitical uncertainties resulting from the conflict in the Ukraine.

Advantages for Italy

For Italy, the transition toward new economic and energy models can serve as a driver of economic growth, bringing long-term benefits to both businesses and citizens.

When it comes to technologies for producing energy, the largest increase in installed capacity in Europe is expected for photovoltaics, the cheapest of the available generation technologies; between 2021 and 2030, Italy is expected to see an increase of 58 GW for solar compared to 25 GW for wind power.

Batteries and storage systems – which are essential for the market penetration of renewables, the deployment of electric vehicles, and changes in electricity demand patterns – are another strategic sector. In this area, Italy is expected to grow by between 60 and 106 GWh (20 to 30 times more than the current 3.35 GWh).

Electric heat pumps powered by renewables – the most effective way to efficiently decarbonize heating and cooling in buildings – are also expected to become more popular in Italy, with a predicted increase of 10 million units, from 1.6 million in 2020 to 11.6 million in 2030.

Thus, as the study shows, Europe and Italy have the necessary means to meet these objectives, expanding upon and improving the many initiatives that have already been introduced, to make the most of the wide-ranging, lasting opportunities that can be found along the path of transition and decarbonization.

Download the executive summary of the study “Energy transition strategic supply chains. Industrial roadmap for Europe and Italy”